Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 139/2019

SUBJECT: ECONOMIC POLICY ADVISORY AND FINANCIAL ENTITIES MANAGEMENT - MODIFICATION OF THE LEGAL RESERVE REGULATION FOR FINANCIAL INTERMEDIATION ENTITIES.

VIEWED:

• The Political Constitution of the State (CPE) promulgated on February 7, 2009.
• Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia (BCB).
• The BCB Statute approved by Board Resolution No. 128/2005 of October 21, 2005 and its subsequent modifications.
• The Legal Reserve Regulation for Financial Intermediation Entities approved by Board Resolution No. 69/2017 of May 22, 2017 and its subsequent modifications.
• Report BCB-APEC-SIE-INF-2019-076 of October 7, 2019, from the Economic Policy Advisory (APEC) and the Financial Entities Management (GEF).
• Report BCB-GAL-SANO-DLBCI-INF-2019-308 of October 8, 2019, from the Legal Affairs Management (GAL).

CONSIDERING:

• That Article 327 of the CPE establishes that the BCB is a public law institution, with legal personality and its own assets. Within the framework of the State's economic policy, it is the function of the BCB to maintain the stability of the internal purchasing power of the currency, to contribute to economic and social development.
• That in its Article 328, the CPE indicates among the attributions of the BCB, in coordination with the economic policy determined by the Executive Branch, to determine and execute monetary policy.
• That Article 7 of Law No. 1670 provides that the BCB may establish legal reserves of mandatory compliance by banks and financial intermediation entities. Its composition, amount, method of calculation, characteristics, and remuneration, shall be established by the Bank's Board of Directors, by an absolute majority of votes. The control and supervision of the legal reserve shall correspond to the Superintendence of Banks and Financial Entities, currently the Financial System Supervisory Authority (ASFI).
• That Article 37 establishes that the BCB will be the depository of the liquid reserves intended to cover the legal reserve and attend the payment system and other operations with the BCB of the financial intermediation entities subject to the authorization and control of the Superintendence of Banks and Financial Entities (currently ASFI).
• That Article 44 states that the highest authority of the BCB is its Board of Directors, which is responsible for defining its policies, specialized regulations of general application, and internal rules; as well as establishing administrative, operational, and financial strategies of the BCB, approving their respective short and medium-term programs. And for the follow-up and oversight of their execution, it will have access to information, independent analysis and audit services.
• That subsections a), i), and o) of Article 54 indicate as attributions of the BCB Board of Directors to issue norms and adopt general decisions that may be necessary for the Issuing Entity to fulfill the functions, competencies, and powers assigned to it by Law; and to fix and regulate the administration of the legal reserve to which banks and other financial entities must be subject, disposing measures for its compliance; and to approve, modify, and interpret the Statute and Regulations of the BCB, by two-thirds of the votes of all its members, without the need for any additional administrative act.
• That items 7 and 29 of its Article 11 of the BCB Statute establish that the Board of Directors of the Issuing Entity has the attributions to establish, by absolute majority of votes, legal reserves of mandatory compliance by financial intermediation entities and approve their composition, amount, calculation, characteristics, forms of administration, custody, and remuneration, according to Regulation; and to approve, modify, and interpret the Statute and Regulations of the BCB, by two-thirds of the votes of all its members, without the need for an additional administrative act.
• That the second paragraph of its Article 26 determines that every project of Board Resolution must be motivated and justified by a Technical Report from the Management or Managements to which the subject matter of the Resolution corresponds, and by a Report from the Legal Affairs Management. These reports must be sent to the Board of Directors by the General Management with its recommendation.
• That the Legal Reserve Regulation for Financial Intermediation Entities aims to establish the technical and operational conditions, regarding the constitution and form of administration of the legal reserve, for financial intermediation entities authorized by the ASFI.
• That through Report BCB-APEC-SIE-INF-2019-076, the APEC and GEF conclude that in order to maintain the expansionary orientation of monetary policy, they submit to the consideration of the Board of Directors the modification of the Legal Reserve Regulation for Financial Intermediation Entities.
• That in Report BCB-GAL-SANO-DLBCI-INF-2019-308, the GAL concludes that the modification of the Legal Reserve Regulation for Financial Intermediation Entities, justified through Report BCB-APEC-SIE-INF-2019-076 from the APEC and GEF, does not contravene the current legal framework, and therefore is legally procedent.

THEREFORE, THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Approve the modification to Article 29 (Constitution of the Fund for Credits destined to the Productive Sector and Social Interest Housing II) of the Legal Reserve Regulation for Financial Intermediation Entities, in the following manner:

IT SAYS:

Article 29 (Constitution of the Fund for Credits destined to the Productive Sector and Social Interest Housing II).

The Fund for Credits destined to the Productive Sector and Social Interest Housing II (CPVIS II Fund) is constituted with the resources released by the modifications to the Legal Reserve Regulation dated April 24, 2018, and voluntary contributions.

Financial Intermediation Entities (EIFs) may make new voluntary contributions to the CPVIS II Fund until September 30, 2019, only with foreign currency (FC) resources deposited in the BCB's account at their correspondent bank abroad since February 19, 2019. EIFs may request the BCB for the partial or total return of their participation in the CPVIS II Fund that is not guaranteeing liquidity loans in national currency (NC). In the case that EIFs request the return of resources that are guaranteeing NC liquidity loans, they must first pay them. This return may be made in the EIFs' accounts abroad, without the BCB charging the Commission for transfer of funds abroad for the financial system established in the BCB's Service Fees Table approved by Board Resolution, up to the amount corresponding to voluntary contributions made from February 19, 2019, to September 30, 2019.

IT MUST SAY:

“Article 29 (Constitution of